By Mark Himelman, Vice President of Strategic Financial Consulting
Introduction
Lease accounting has changed dramatically in recent years. With the adoption of ASC 842 in the U.S. and IFRS 16 internationally, nearly every organization is required to recognize lease liabilities and the corresponding right-of-use (ROU) assets directly on the balance sheet. This shift was designed to increase transparency, but it also brings new challenges.
- Compliance Pressure – Getting it wrong isn’t an option. Missteps in lease accounting can lead to audit findings, financial restatements, and reputational risk. Regulators and auditors expect companies to demonstrate accuracy and consistency in how they record lease obligations and assets.
- Complexity Behind the Numbers – Lease accounting goes far beyond simple rent schedules. Companies must now account for variable payments, renewal and termination options, residual guarantees, lease incentives, and even embedded leases hidden within service contracts. Each of these elements can materially impact reported assets and liabilities.
- Business Impact – Lease accounting isn’t just a compliance exercise. Decisions around how leases are structured and reported can alter financial ratios, debt covenant calculations, tax planning, and key performance metrics. For management teams and investors alike, clear visibility into lease obligations is critical to strategic decision-making.
How LCG Can Help
LCG’s Strategic Financial Consulting team (SFC) brings deep technical accounting expertise to the table to help comply with ASC 842/IFRS 16 through:
- Audit-Ready Outputs – ROU assets, lease liabilities, interest/straight-line amortization, and disclosures that withstand auditor scrutiny.
- Cross-Functional Experience – We speak both technical accounting and operational finance to bridge the gap between accountants and auditors.
- Efficiency & Accuracy – Reduce manual errors, avoid costly restatements, and streamline reporting.
- Strategic Insights – Beyond compliance, we help you analyze lease vs. buy, optimize lease portfolios, and model the P&L impact of lease decisions.
Key offerings include:
- Gathering lease data across real estate, equipment, and fleet leases
- Building ROU asset and liability schedules that comply with ASC 842/IFRS 16
- Documenting assumptions, policies, and judgments for audit support
- Creating calculation models for ongoing compliance
If you need assistance in any of these areas, contact Mark Himelman at [email protected], Vice President of the Strategic Financial Consulting group, to get started.